Whither Goes the Cash in Iraq?

us_auditors_of_iraq_reconstruction_see_potential_and_roadblocksSpecial Inspector General for Iraq Reconstruction Stuart Bowen has been on the Hill this week going through the gory details of Hard Lessons:The Iraq Reconstruction Experience, his Feb. 2, 2009, report on waste, fraud, and mismanagement of the roughly $51 billion we American tax payers gave for the rebuilding of Iraq.

“For anyone who has followed the issue,” reports Wired blog, “the conclusions are not surprising. In advance interviews, Bowen estimated that around 15 percent–or $3 billion–of the $20 billion allocated for big-ticket reconstruction projects in Iraq had been wasted. In a draft copy of the report that was leaked last year, Bowen recalled seeing bags of dollar bills literally being hauled out of the Republican Palace, headquarters of the Coalition Provisional Authority. ‘What I saw was troubling: large amounts of cash moving quickly out the door,’ he wrote. ‘Later that same day, walking the halls of the palace, I overheard someone say: “We can’t do that anymore. There is a new inspector general here.”’”

Below are a few of my personal favorite highlights from the report. I especially like #4 where the Coalition Provisional Authority tried to keep track of $20 billion using an Excel spreadsheet! Additionally, there have been at least 35 convictions of U.S. personnel on charges of  fraud, theft, embezzlement, etc.

1. “I have no idea what CENTCOM was planning, and I have absolutely no idea what the Joint Chiefs of Staff were planning. I do know that the political guidance they were getting from Rumsfeld, the NSC, and the White House was, ‘You got about three months to get [the postwar Iraqi government] up and running.’”–General Colin Powell, Secretary of State (2001-2005), from SIGIR interview February 4, 2008 (Hard Lessons: The Iraq Reconstruction Experience p.3)

2. “Production of electricity came to a near-complete halt during the 2003 invasion. By mid-April 2003, the grid was generating an average of just 711 megawatts of electricity per day. Postwar looting and sabotage had destroyed nearly 1,000 electrical towers, and the loss of numerous electrical control systems caused frequent blackouts in Baghdad. Without electricity, oil production also came to a standstill. Many oil facilities were safely shut down, but some oil stocks were destroyed by fire. Although production restarted fairly quickly, it averaged only 300,000 barrels per day—about one-eighth of prewar levels—in May 2003.96 Already in a state of severe disrepair, Iraq’s essential services declined precipitously after the March 20 invasion due to war damage, looting, and sabotage. ORHA had neither the time nor the resources to fix these problems. Thus, the CPA took them on, shouldering the responsibility for restoring broken essential services and distributing them more fairly among all Iraqis.”—Hard Lessons: The Iraq Reconstruction Experience (p.65)

3. “In early 2006, a controversy aose over the near-full payment of fees of $263 million billed by the contractor KBR for oil-sector work, including what appeared to be exorbitant charges for transporting fuel to Iraq from Turkey and Kuwait. Defense Contract Audit Agency auditors raised serious questions about these charges. Although a 2004 audit reported that the costs were inflated and not supported by documentation, the Army decided to pay KBR all but $10.1 million of those contested costs. That meant the Army withheld payment on just 3.8 percent of the charges questioned by the Pentagon audit agency, far below the rate at which the agency’s recommendation is usually followed or sustained by the military.”—Hard Lessons: The Iraq Reconstruction Experience (p.351)

4. “But the Coalition Provisional Authority failed to keep detailed accounts of how most of this money was spent. Expenditures of the roughly $20 billion in Development Fund for Iraq money used by the CPA were initially tracked on an Excel spreadsheet—hardly a sufficient control. At its end, the CPA had barely begun to execute the grand reconstruction program it had designed.”—Hard Lessons: The Iraq Reconstruction Experience (p.328)

5. “By mid-2008, daily electricity production had edged up above prewar levels, with outputs averaging 4,400 megawatts per day. The third quarter of 2008 showed postwar highs, averaging over 4,900 megawatts per day. But Iraqi demand still far outpaced production. The electricity distribution system improved too, but equitable allocations among the provinces and major cities remained a problem. Oil production continued to rise through 2008, falling just short of prewar levels of 2.58 million barrels per day by mid-year. The July 2008 production rate reached 2.43 million barrels per day—the highest since the 2003 invasion. Because of the success of infrastructure security measures, no successful pipeline attacks occurred in 2008.”—Hard Lessons: The Iraq Reconstruction Experience (p.319)


6. “[A reservist] on his second tour in the violent Sunni-dominated province, served as an economics liaison officer for the Marine command. Since his first tour, the situation had grown dire. [He] saw no purpose in continuing approaches to reconstruction that had already failed in the province. “If it wasn’t working,” he said, “doing more won’t help.” In place of existing programs, he proposed the kind of interventions that fell outside IRRF 2’s focus on infrastructure construction, but beyond CERP’s purview. “We need local community action plans—livestock vaccines, seed distributions, housing funds,” the reservist said, projects that could jump-start Anbar’s idle factories and farms. USAID programs could provide some of these, but it was for the most part too dangerous for them to operate in the province. …

[The reservist] was right to notice that U.S.-funded reconstruction programs had overlooked the agriculture sector. Although agriculture was Iraq’s second-largest economic activity, with the potential to employ an estimated 25 to 30 percent of the population, the IRRF 2 supplemental did not fund any agriculture programs in 2003.69 The CPA ultimately stepped back from its initial policy and tasked USAID to work with the Ministry of Agriculture to develop a plan. Three years later, activity levels were still low. In 2006, the primary instrument was still the “Agricultural Reconstruction and Development Program for Iraq,” which USAID had launched with $5 million in October 2003.70 During the November 2004 IRRF 2 reprogramming, Ambassador Negroponte increased its funding to $72 million, but even this amounted to an investment of only $3 per Iraqi.”—Hard Lessons: The Iraq Reconstruction Experience (pp.282-283)

2 responses to “Whither Goes the Cash in Iraq?”

  1. Shocking how an Administration that beat up naysayers as defeatists and non-supporters of the troops could be so deaf and so non-supporting. I found the Marine story especially hypocritical – these men needed help and they didnt get it despite Bush’s rhetoric – grounds for impeachment – the Commander in Chief asleep at the switch. He wasnt a good chief executive as he was billed or didnt really care. Where was the midnight oil – we needed a Lincoln not an underachiever. The greatest irony is that Iran is stronger and will takeover Iraq after the US leaves. So what was it all for?

  2. The way I see it these are similar folks as in days of old who saw themselves ‘at the top’ as the elite. They are the monarchy, so to speak, who need answer to know one. Many lost heads attempting to reveal matters unfair, untrue, unseen. Same attitude– how dare we [the unentitled]! Is it possible that our culture has grown up enough to bring to light things in darkness, to step up to the plate and put an end to this behavior? Will our governing bodies see the light behaving justly.

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